New York City’s Chinatown is a vibrant tourist hub, with fresh food markets and celebrated restaurants packed in alongside souvenir shops.
However, tariffs are threatening businesses in Chinatowns across the country. One of the establishments directly affected is Phoenix Palace, a local hotspot in New York City.
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The owner, Cory Ng, told CBS News that his restaurant imports nearly every single ingredient from China — and he saw costs rise significantly in the wake of tariff policies.
President Donald Trump originally announced plans to impose a 145% tariff on Chinese imports. Since then, the U.S. and China have agreed to a 90-day pause, with the U.S. reducing its tariff on Chinese imports to 30% and China dropping its tariff (on most goods) down to 10%.
However, a permanent deal between the two countries has yet to be reached, and if tariffs end up rising substantially after the pause, a host of local businesses could end up having to close their doors.
"I get it, a business is to make money, but it’s not for us to have a collection of Rolexes. It’s to take care of our family," said Ng, emphasizing the importance of these establishments. "Remember what my grandma and my mom had to do for us to get here. Yeah, and that’s the point of it, to remember where we come from. It’s a privilege."
Chinatown businesses will suffer
There are over 50 Chinatown neighborhoods across the U.S., with some of the most established ones in New York City, Boston, and San Francisco.
However, in these neighborhoods, local businesses were struggling to cope with the tariffs.
Before the rollback, Ng told CBS that some of his ingredients cost double to source. "We’re not importing fresh ingredients like vegetables, but everything else around it — spices, seasonings, even our beers. Now it’s double. Who’s going to pay $20 for a beer? It’s impacting us every time we put food on the table," he explained.
Ng doesn’t want to raise prices. Doing so could not only hurt customers, but drive them away.
In Los Angeles’s Chinatown neighborhood sits Yue Wa Market, a small herbal medicine and grocery shop. Owner Amy Tran raised the price of a herbal concoction when the new tariffs were imposed and said she may have to do the same for dozens of other imported products. But that’s a problem for her customers, who are mostly Chinese seniors who rely on food stamps, The Guardian reports.
“I’m just taking it day by day,” she told the newspaper.
Ng and business owners in a similar boat may be getting some temporary relief now that tariffs are temporarily paused. The Wall Street Journal reported that in the week beginning May 12, when the trade truce was announced, bookings for containers to the U.S. from China more than doubled compared with the week before due to pent-up demand.
But while Ng and other business owners can try to stock up during the current cool-off period, that won’t work for perishable goods.
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What happens if the U.S. and China can’t reach an agreement?
In the wake of the recent tariff pause, the stock market stabilized after plunging in April. But if the U.S. and China can’t reach a long-term agreement after the current 90-day pause ends in August, it could send markets spiraling once more.
It could also force countless small Chinatown businesses to go under — especially those operating with already tight margins and coping with the 30% tariffs on Chinese goods.
Restaurants certainly fit that bill. Restaurant365 says the average profit margin for full-service restaurants is only 3-5%. For fast casual restaurants, it’s 6% to 9%. These margins don’t give small restaurants much wiggle room to absorb the higher cost of sourcing goods that full-fledged tariffs could result in.
“Restaurants rely on China for many of their key inputs, including food ingredients, plastic packaging and utensils, and equipment,” warned the National Restaurant Association in a press release.
Unfortunately, passing higher costs onto customers won’t solve the problem.
Chinatown businesses get much of their sales from neighborhood residents. But it’s unlikely they can afford major price hikes.
In 2022, the median household income in New York City’s Chinatown/Lower East Side was $58,540, according to the Furman Center. This was about 25% less than citywide median household income ($77,550). The poverty rate was 26% compared to 18.3% citywide.
Making matters worse is that some Chinatown businesses may still be recovering from the events of the pandemic.
“The tariffs add on to the current uncertainties that Chinatown business owners were already facing for several decades,” said author Laureen Hom to The Guardian. She mentioned “suburban growth, gentrification pressures from downtown and neighboring areas, and the economic downturn and anti-Asian sentiment spurred by the pandemic.”
Of course, it’s possible that a reasonable agreement on tariffs will be reached between the U.S. and China.
“I don’t think the American government wants to leave China,” said JPMorgan CEO Jamie Dimon in a May 22 Bloomberg interview. “I hope they have a second round, third round or fourth round and hopefully it will end up in a good place.”
People like Ng aren’t ready to give up. "Chinatown is a resilient community,” he told CBS News. “We’ve beaten so many things. We gotta continue on this path, this legacy, and never let that go in vain."
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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